Alan purchases 10 percent fewer bags of chips when his income decreases by 5 percent. Based on only this information, we know that for Alan
A) chips are a normal good.
B) chips are a complement to salsa.
C) chips are a substitute for pretzels.
D) chips are an inferior good.
E) the price of chips fell.
A
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Lemonade anyone? Raymond decides to set up a lemonade stand every weekend for the next four weeks to save up for the latest x-men comic. He has to pay his brother Robert $10 as a one-time payment for him to not bully Raymond or drive his customers away
The lemons and sugar cost him $10 (the water is free) and his dad offers to set up his stall for him. He ends up making $15 his first weekend. Frank, his father notices this and advises Raymond to shut down the stall since he is making less than he is spending on the stall. What would you advice Raymond to do?
Which of the following is FALSE regarding inelastic demand?
A. Price elasticity of demand is less than 1 (Ep < 1). B. If a firm raises price, total revenues will go up. C. If a firm lowers price, total revenues will fall. D. Price elasticity of demand is greater than 1 (Ep > 1).